Bloodthirsty Capitalists
A conversation with Chris Sacca about climate investing — and Travis Kalanick.
Chris Sacca apologized for joining our Zoom call a few minutes late. He had to deal with a moose. “When a moose decides to sit, they go nowhere,” Sacca told me from his home in Jackson, Wyoming. Thankfully, he shooed the moose out of the way with his truck before it settled down. Then he conferenced in over his Starlink satellite internet connection.
I’ve been trying to convince Sacca — an early investor in both Uber and Twitter — to give me an interview for a while.
Sacca and I were not close during the whole Uber saga. He didn’t generally return my messages, but I’ve always suspected that he was leaking to certain competitors during the fall of Travis Kalanick. Sacca and I knew all the same characters. Well, he knew them personally, while they were the subjects of my stories. Finally, when Sacca announced last week that his climate investing firm, Lowercarbon Capital, had raised $800 million, I DM’ed him and he agreed to talk.
So, when we started chatting it was something like meeting your good friend’s childhood friend who you’ve heard about for years, with whom you share a lot of acquaintances, but you don’t actually know this friend of a friend.
This guy just happens to be a billionaire.
Sacca and I talked for an hour and a half. He divulged more than he would have liked. (I know this because he called me the next morning to obsess over what he’d said.) We talked about Sacca’s views on Jack Dorsey and Travis Kalanick — neither of whom he’s on speaking terms with these days. Sacca told me about his ongoing relationship with the Collison brothers and a conversation he had with President Joe Biden a few months ago. Sacca told me about his new calling as a climate-oriented investor, how his partner at Lowercarbon came recommended by way of Barack Obama, and how even though Sacca is trying to save the planet he’s still investing in “bloodthirsty capitalists.”
Lowercarbon Capital
Sacca announced that he was “retiring from startup investing” (or as he titled the post “Hanging Up My Spurs”) in April 2017.
It was always hard to believe that Sacca was really retiring in his early forties.
In Sacca’s new investor letter for his latest climate funds, he describes his return this way: “In the timeless words of LL Cool J, don’t call it a comeback, we’ve been here for years. We just finally admitted to ourselves that 60 hours a week has been the opposite of retirement. This time around, we’ve staffed up by bringing on full-time science and sector experts while building a community of advisors and collaborators that keep us learning every day.”
Sacca — along with his wife, Crystal Sacca, and general partner Clay Dumas — have invested in about 50 companies with the Saccas’ own money. Lowercarbon retroactively gives outside investors exposure to a slice of those companies and is continuing to make a bunch of investments in climate-oriented companies.
Sacca, who is now 46 years old, is actually creating four funds — two oriented around past investments and two for future investments. The two early-stage funds 411.2 LP and 419.1 LP are named after the “the highest monthly average concentration of CO2 in the atmosphere” in the years that the team started investing out of the funds. Sacca named the two growth funds N2O 333.9 LP (Nitrous Oxide) and CH4 1893.4 LP (Methane) after two other potent greenhouse gases.
He describes an almost mercenary mentality toward building deal flow and expertise in climate investing: “I had to go out and we built relationships at all the labs, all the grad schools, donated to a bunch of research projects. We do a bunch of nonprofit stuff in this space, and some advocacy stuff. That was never my passion,” he says. “There are some things that will never be funded by venture that have to happen, research-wise. But it was also like, how do we meet these people? We read everything we could read and then called the authors. We watched all the talks and then met with those people after.”
Unlike researchers, he’s often found climate activists to be a distraction from his investing. “Dude, this is a crisis situation. The house is on fire. And you’re yelling at people who are running to get buckets full.”
“I think shifting from plastic straws to paper straws is not going to unfuck the planet,” Sacca mused. “Will it have an incremental benefit in some cases? Yes. That’s not what we’re going to work on. But I’m never going to be like, ‘Fuck you, paper straw guys.’”
Silicon Valley has a painful history with clean energy funds. Both Kleiner Perkins and Khosla Ventures saw many of their climate investments fail. But Sacca argues that those funds helped clear the way for investing. “We have the first generation of young people coming out of hard engineering schools saying expressly: I’m starting a company.”
Kleiner Perkins and Khosla “needed government,” Sacca says. “At the same time, they were investing in climate, they hired Al Gore; they hired Colin Powell. And they started going to Washington to try and get rules changed. And Washington’s a hard place to rely upon for your business.”
Lowercarbon, on the other hand, is investing in companies that may want to sell to the government but don’t rely on big policy changes or other forms of material government support, Sacca says.
One portfolio company that Sacca highlighted was Swedish company Heart Aerospace, which is building a 19-seat electric regional plane. The founder, Anders Forslund, pitched Sacca that he was going to create an aerospace company that builds a plane end-to-end.
“We’re like, come on,” Sacca recalls. “We went and checked with Boeing and Airbus — they're like, ‘not possible.’”
“A plane is a big fucking thing,” Sacca recalls thinking. “Can you really make it for millions of dollars — not billions?”
But Forslund convinced Lowercarbon that the company could do much of its testing on the computer. “So you save all these cycles of development that used to happen in the fucking hangar until you've literally figured it out.”
“We went in early, and the dude has billions of dollars of orders now from those same manufacturers and from the major airlines. And I don’t mean LOIs. I mean, actual fucking orders,” Sacca says. Lowercarbon has invested in every Heart Aerospace funding round, Sacca told me. “I just wish that first check was bigger.”
A Sampling of Lowercarbon Portfolio Companies
“Wind power on a clothesline” (AirLoom)
“Batteries that make solar work 24/7” (Antora Energy)
“Ultra-light electric boats” (Arc Boats)
“Superfast hydrofoil cargo ships” (Boundary Layer Technologies)
“Giant carbon sucking vacuums” (Carbon Engineering)
“Pumping oil back underground” (Charm Industrial)
“Fusion with plasma-taming magnets” (Commonwealth Fusion Systems)
“Methane-slashing Bitcoin mining” (Crusoe Energy)
“Forest-planting drones” (Dendra Systems)
“Protein from trash-eating flies” (Entocycle)
“Pigless bacon” (Higher Steaks)
“Clean, fast, cheap lithium mining” (Lilac Solutions)
“Cows that burp less methane” (Mootral)
“Kelp-farming, carbon-sinking robots” (Running Tide)
“Cheap zero-carbon cement” (Sublime Systems)
Sacca explains that removing oil and gas from a traditional industry can sometimes mean creating a more profitable business. “To get philosophical for a second, carbon is expensive. It means digging up old dinosaur bones, and transporting them, and burning them. That’s an implicit cost in everything we do, so it’s not just pollution. It’s actually an expensive part. Every time we’re able to remove that, there’s cost savings there,” Sacca says.
For instance, Lowercarbon invested in a company called Solugen, which produces specialty chemicals through the directed evolution of enzymes. “Solugen, their margins are like 50, 60%,” Sacca says. “That’s an insanely profitable company.” They’re selling commodity products; since they don’t rely on oil, they can create them more cheaply. “They just let the enzymes do their thing,” Sacca says.
The White House
“We’re friends with everyone in that administration who works on climate. I appreciate that they made climate literally a cabinet level position. I appreciate that they put climate in every single department there,” Sacca says. “We speak to Gina McCarthy and Secretary [John] Kerry, and those folks there.”
Sacca told me about a Zoom conversation with President Biden a few months ago:
“One time I was talking to Biden about it. I said, ‘Okay, you’re the Scranton, PA jobs guy.’ I'm like, ‘Do you remember those old Like a Rock Chevy truck commercials?’” Sacca says, briefly singing the “Like a Rock” jingle to me. “A truck would bounce around, mud flying, sparks going, a guy wiping his brow with a beer at the end of a hard day, trusty dog, American flag, you know — that’s what green jobs look like,” Sacca says. “That's literally what it looks like at the base of a windmill. That’s literally what it looks like when we put it in a geothermal plant. Carbon sequester literally is running the same damn pipes in reverse,” Sacca recalls telling the president. “These are good paying union jobs. I was like, ‘I want you to have that image in your head when you talk about this shit. This isn't hippie Kumbaya. This is literally an economic engine.’”
“I kind of saw the light bulb go off on that,” Sacca recalls. “And I’m like, every time you talk about climate, think about it this way.”
Sacca said that he “founded and/or funded, literally, almost every tool that Democrats use to run their campaigns,” but that he didn’t want to spend his money on “AM radio” ads during the presidential campaign. “I couldn't believe that Jared Kushner had asserted a technological advantage over Democrats,” Sacca says.
It was through his work in Democratic politics that he hired Lowercarbon general partner Clay Dumas. Sacca says, “The Pod Save America guys got back in 10 minutes. President Obama texted me through his body man, ‘hire him immediately.’”
“I'm like, okay, that’s a pretty strong reference,” Sacca says.
Twitter
Sacca is famous for investing early in Twitter and then building up an even larger position in the social network by making investments with special purpose vehicles. Sacca says he owned more than 16% of Twitter at the time of the IPO.
I asked him if he made much money off Twitter. “Yeah, a fuckton,” he replied. “Twitter made me — half billion dollars, maybe? I think I returned $4 billion to investors, ultimately.”
Sacca says he sold his shares in Twitter “within a year of Jack taking over, something like that.”
“I was very Team Ev [Williams],” Sacca says. “I like Jack, but I didn’t like Jack as CEO. I think Jack didn’t know who he was. He was trying to be a designer. He was trying to be famous. He was trying to be fashionable and he wasn’t reflective. He puts on these airs of being a thinker, but that’s not who he is.”
“Ev is a philosopher who invests nothing in his public persona. A platform like Twitter has the deepest questions (that I don't think I'm personally capable of answering). So obviously, some of the lack of investment in philosophy really started to rear its head over the last few years, and that’s one of those platforms where you have to be the kind of person who wrestles with big questions after midnight: Who are we? What do we do? What do we stand for? What is our obligation to truth? What is their obligation to free speech? Is it just unbridled free speech, etc? How do we prioritize engagement over quality? And spam and abuse? And those are hard fucking questions. And I don't think that’s Jack’s strong suit. To be clear, I actually think he cares. But he's just not the guy to answer those things. Jack does fancy himself the guy to comment on the font and the pixels and stuff like that, and he’s not bad at that. But the big questions aren’t his thing. So I was pro Ev — when Ev got fired, I was very upset about that. I liked Dick [Costolo]. He was a friend for a long time. But I just don’t think he had any vision. I think he was an operator. Similar to Uber where Dara [Khosrowshahi] is not a visionary. He wasn’t hired to be. He’s an operator. He was brought on because it was time for that company to have an operator — somebody's got to make it work. Now is not the time for Uber to take over three other industries. Somebody's got to make Uber today work. So Dara is the right guy for that company right now.”
Whereas with Twitter, Sacca says, “I think that company still needed some vision, still needed some daring product. And that wasn't Dick. So when he wasn’t working out, the best of the choices was Jack. Ev wasn’t available. Nobody else they talked to, I felt, was a product-centric guy. So, the best of the choices was Jack. I lobbied for Jack because they just needed to choose and move forward. Like there were all these camps within the company fighting. But soon after that, I realized Jack wasn’t going to launch new shit. He was only there part time and it sucked.”
“These days,” Sacca says, “I give Kayvon [Beykpour] some credit for pushing out code. He has a ‘let’s try something’ attitude. And that's what that company needs to do is just try some shit. And if it doesn’t work — I liked that they retired fleets, just being honest with themselves. That didn’t hit. Let’s just kill it and move on. It was really important for them to do that.”
Sacca doesn’t have a financial stake in the Twitter drama anymore. “I own no shares,” he says.
Stripe
I told Sacca I’d heard a rumor that Stripe was selling at a $200 billion valuation in the private markets.
“We’ve been getting offered $175 billion from some of these chop shop brokerages,” he says. “But there is no way I’m selling.”
He says that he owns Stripe shares in three funds and has consistently bought more whenever he could, including buying some at the end of 2020 at a roughly $40 billion valuation.
Sacca cautioned that unauthorized secondary markets trades like the ones offering to buy his shares at an astronomical price could someday end in disaster — even if Stripe’s valuation keeps climbing. “The crazy thing is, none of those trades are authorized. It’s a forward contract. But if the guy who holds the stock gets divorced, or goes personally bankrupt, or whatever, you’re fucked.”
Sacca wondered whether someday investors might exercise their right of first refusal and block unauthorized secondary sales retroactively. “I haven’t seen anyone do this yet, but somebody will, because there’s billions of dollars at play,” Sacca says. “I’ve been shocked that nobody’s done that yet.”
One question I had in the back of my mind going into the interview with Sacca was whether he had really shifted all his attention to the climate. As we were talking about Stripe, it became clear that Sacca is still very interested in traditional Silicon Valley companies.
“I was talking to the Collison brothers the other day, and it occurred to me they might have the most concentrated holdings in history.”
“I believe in that company. I think it’s going to be a trillion-dollar company, but they’ve got all their eggs in this basket,” he says. “As an investor, I love that signal.”
“However, I’m pro founder liquidity, because I think it helps them align their interests with VCs and think longer down the road,” Sacca says.
Take Instagram founder Kevin Systrom, Sacca says, putting himself in Systrom’s shoes, “Imagine what he was thinking when that Facebook offer came in. Are you fucking kidding me? Right? I'm going to make half a billion dollars. How do I say no to that shit?’ And then I’m pretty sure Kevin went on to become a billionaire because he held some of his stock.”
Besides Stripe, Sacca says he’s continued to invest in existing portfolio companies like Tala and Mark43. He also said that he and his wife are also limited partners in “75 or so funds.” Sacca says, “What we did to try and promote diversity in this industry was back women and people of color to start their own funds.”
Uber
Sacca has remained a Khosrowshahi defender through the stock slump. Sacca said that Khosrowshahi faced tough headwinds this year given that it’s been so hard to hire drivers. “He’s got to pay out the nose for drivers,” Sacca says.
I asked Sacca if he’d talked to Kalanick since his ouster, “No, most people haven’t,” Sacca replied.
I told Sacca that I’d heard CloudKitchens is out trying to raise another funding round. (Sources told me that Kalanick seems to be looking to raise a billion dollars, so it’s hard to believe that Kalanick would accept a valuation below $10 billion given dilution.)
Sacca said that he heard CloudKitchen’s business was “having a harder time” than he would have thought.
We concluded our conversation by reflecting on Kalanick’s fall from grace. That saga seemed fresh on Sacca’s mind.
He told me that he’d briefly met with the writers’ room for the upcoming Showtime anthology series on Uber over Zoom.
“As far as I've been told, I was written out of the show,” Sacca says. “That’s all I wanted. And the writers are kind of like, ‘I think you're glad too.’”
Sacca continues, “I don't think anyone's going to be portrayed well. But, on the other hand, they cast Kyle Chandler as Bill Gurley. That’s amazing.”
Then Sacca launched into his complicated opinion of Kalanick. It was clear that the show had him thinking deeply about his old friend.
“I personally have a lot of challenges with Travis. And I think there are a lot of examples of where he could have been a much better manager,” Sacca says, prefacing an unexpected defense of the Uber co-founder. “But I also think him being tarred and feathered for life is ridiculous. He didn’t commit any biblical crimes. The guy was just guilty of being a bro-y asshole,” Sacca says.
“I don’t think we'll ever communicate again,” Sacca says. “But I don’t think he’s a fraud. And I don't think he’s a criminal. I don’t think he committed unforgivable crimes. I think he was not good at managing a company culture. I think he was afraid to hire strong people around him. I think he had an adversarial relationship with his board. So, there wasn’t any kind of give and take there. I think Bill Gurley is maybe my favorite venture capitalist of all time. And I’m always sad that Travis wasn’t able to take advantage of Bill and what Bill has to offer.”
“However Travis started out, he was also a product of what was going on around him. Cities would try to shut Uber down and threaten him with jail time but without being able to point to any law he was breaking. That kind of real corruption hardened him and made him feel he couldn’t trust anyone,” Sacca explained to me.
“Everyone always asked us, ‘why didn't we fire him?’” Sacca says.
He explains, “We couldn’t. The board had no power to do anything for years. Plus, the most intoxicating and reinforcing drug for a CEO is when the numbers are going up.”
“When I would say to Travis, something like, ‘Dude, you can’t do that,’ back when we were talking, he’d be like, ‘Well, the numbers say otherwise.’”
“If you go all the way back to that first New Year’s where they turned on surge pricing. Everyone is bitching and moaning about it on Twitter, right? Twitter blew up. And the next day, we had a call,” Sacca remembers.
“And Travis had been out giving press interviews basically — the theme was ‘users need to suck it up.’ You know, ‘get over it.’ He’d say, ‘It’s a feature that’s here to stay.’”
“We knew it was here to stay. It made sense,” Sacca says. “That was one of the core innovations of Uber: It was a fluid market for driver supply and rider demand.”
“Well, what happened was, we were like, Travis, you can’t talk like that. You can’t say that,” Sacca says. “And then he would show us the data.”
After the surge pricing announcement, Sacca remembers Kalanick telling him, “Look at this Twitter user who’s yelling about it and saying they’re done. The next day, they use Uber again. Fuck them.”